A just increase in the minimum wage

Through the newly set up Low Wage Commission, employers and trade unions have in effect agreed to the first no strings attached rise in the minimum wage in more than a generation.

Before the 2013 election, the Nationalist administration had warned the electorate that, under a Labour Government, the minimum wage would be frozen. This was veritably a case of the pot calling the kettle black, as successive Nationalist administrations had only topped the minimum wage with the cost of living adjustment (COLA). If they had not done so, they would have breached the COLA agreement signed in 1990.

Reaching agreement among social partners about increases in the minimum wage is no mean feat. On the one hand you have the employers who, of course, are never that keen on increasing their costs. On the other, you have the trade unions, for whom a rise in the minimum wage typically means a change in the relativities between different scales of workers covered by collective agreements.

In 2017 a Labour administration managed to get social partners to agree to the first increase in the minimum wage over and above COLA since 1989. With effect from 1st January 2017, workers being paid the minimum wage who had been working with the same employer for more than a year were to get up to a maximum of €3 per week adjustment. The following year they would get another €3 per week adjustment. By 2019 they would have reached an increase of €6 in the minimum wage provided that the employee had been in employment with the same employer for three years or more. The devil was in the details, and it was not a straight rise; workers had to stay with the same employer.

All this makes what was agreed to now even more startling. Through the newly set up Low Wage Commission, employers and trade unions have in effect agreed to the first no-strings attached rise in the minimum wage in more than a generation.

Photo credit: MaltaGov

As from the 1st of January, the increases incorporated in the 2017 agreement which one benefited from after three years in employment will instead come in force immediately. On top of that, agreement was reached on another raise of €2 per week. This means that, over and above the COLA of nearly €13 per week, those on the minimum wage will see a monthly increase of €8. Altogether, their pay will be €21 more per week, or 11 per cent higher. This is about twice the percentage increase projected for the average worker.

The announced increase will lead to a rise in their income of around €1,090. To understand the impact of this change suffice it to say that, considering today’s pay rates, they would have had to work 40 days to earn this amount of money. Moreover, all of this money will stay in the workers’ pockets, as Government has pledged that those on minimum wage will not pay income tax.

After the increase on the 1st of January, those on the minimum wage can look forward to another €10 increase spread over the following three years. These would be in addition to the COLA increases. Based on current inflation projections, this should mean that by 2027 the minimum wage could reach €240 per week. Thus, over a legislature, it would have risen by nearly €58 per week, or by a third.

At the end of the day, the minimum wage would be €4,300 higher than that which prevailed in 2012. Two thirds of this improvement would have been observed during the current legislature.

Truly a just increase in the minimum wage.

Main photo credit: Pixabay

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